PRODUCTS AND

SERVICES
CONCEPT
ENT 105
Innovation Management
CHAPTER OBJECTIVES:
After Completing this chapter, the students are expected to :

Define product and services

Explain the classifications of product

Understand the difference between product and service

Explain the product planning and development process

Distinguish the strategies required at different phases of product life cycle

Understand the intellectual property

Explain about patents and types of patents

Explain about copyright and their beneficiaries

Understand the trademark and service mark

PRODUCT PLANNING
-refers to the systematic decision-making related to all aspects of the
development and management of a firm’s products, including:

• branding
• packaging

-over US$100 billion are spent annually on the technical phases alone.
KEY PROCESS REQUIRED IN PRODUCT
PLANNING

IDENTIFICATION

DESIGN

DEVELOPMENT

MARKETING

LIFECYCLE MANAGEMENT OF SUCCESSFUL NEW PRODUCTS

PRODUCT VS. SERVICES

-products and services are two closely aligned concepts

-most products have an element of service in them

Ex. a laptop buyer now buys a comprehensive
bundle of service benefits, in addition to tangible
components of a laptop
PRODUCT VS. SERVICES
products

-something that can be measured and counted

-something you can point at

service

-less concrete and is the result of the application of skills and expertise
towards an identified need
-economic activities that create value and provide benefits for
customers at specific times and place
-intangible and part of an augmented product
Product Definition
a good, service, or idea consisting of a
bundle of tangible and intangible can be made up from
attributes that satisfies consumers and is tangible and intangible
received in exchange for money or elements, which meets a
some other unit of value. customer need.

something that satisfies a

want or need through use,
consumption or acquisition.
 core product
augmented product
this is the base product with no brand, packaging or styling.
Ex. TV

actual product
this is the tangible product complete with packaging, styling,
branding and quality.
actual product Ex. Sony TV

augmented product
this is actual, tangible product with extra services and
benefits.
Ex. Sony TV with 5 yr guarantee and technical support.
core product
Service Definition
an act or performance offered by one
party to another. the process may be samples of services:
tied to a physical product, the getting a haircut, having a
performance is essentially intangible car repaired, watching a
and does not normally result in professional sport, seeing a
ownership of any of the factors of movie etc.
production.

samples of services:
renting a hotel room, depositing money
in a bank, travelling on airplane,
visiting a psychiatrist
characteristics of
services

Intangibility
services is intangible, they cannot be seen, tasted, felt, heard, or smelled before they are
bought.

Perishability
services cannot be stored. as a marketable commodity, a service has a high degree of
perishability. services not used now will be lost forever.
characteristics of
services

Inseparability
a service cannot exist separately from its providers, whether they are persons or machines.

Variability
services are highly variable-their quality depends on who provides them and when and where
they are provided.
 Basic differences between PRODUCTS and
SERVICES

PRODUCTS SERVICES
goods can be described as physical customers do not obtain ownership
objects or devices

customers hold ownership services are actions or performances

products/goods are tangible service products are intangible

no customer involvement in the customer involvement in the production

production process process
 Basic differences between PRODUCTS and
SERVICES

PRODUCTS SERVICES
no variability in operational inputs and greater variability in operational inputs
outputs and outputs

easy for customers to evaluate the harder for customers to evaluate the service
product

inventories required no inventories for services

classifying the products
specialty
risk
products can be classified
depending on who the final
purchaser is. broadly products can
be classified into two major
n s categories depending on the
p t io
i x o intended use of the product:
g m
t i n
rk e
m a
shopping

convenience
effort
classifying the products
consumer products
products purchased by ultimate
household consumers for
ultimate use or non-business
purposes, usually for
consumption of family,
personal, or household use.
organizational products
products intended to be
sold primarily for use in
producing other products
or rendering services for
business purposes.
classification for consumer products
convenience goods
consumer goods that the consumer often buys frequently, immediately, and
with minimum shopping effort.

Ex. toothpaste, soaps, magazines, matches boxes, newspapers

shopping goods
goods that consumer that selects and buys only after making comparisons
with respect to price, quality, suitability, and style

Ex. household furniture, electronic appliances, camera, mobile and

clothing, and cars.
classification for consumer products
specialty goods
consumer goods with unique characteristics and brand identification for
which a significant group of buyers are habitually willing to make a special
purchasing effort.

Ex. expensive cars, photographic equipment, and men’s suits

unsought goods
sudden problem to resolve, products to which consumers are unaware,
products that people do not necessary think of purchasing.

Ex. household furniture, electronic appliances, camera, mobile and

clothing, and cars.
classifying the products
marketing marketing convenience shopping specialty unsought
mix activity goods goods goods goods

less important not important

product packaging important important

price change shift of not important

price conditional important
demand
features non-
less important effective
promotion advertising important location effective important

no. of outlets
distribution many few few many
classification for organizational products

raw materials
used in the form of their natural state or processed to the extent necessary to
ensure economy of protection before being incorporated in the final
product.

goods found in the natural state, minerals, land, products of forests and the
seas; and agricultural products such as wheat, cotton, fruits, vegetables,
livestock, and animal products.
classification for organizational products

operational supplies
materials which are used in the operation of a business and which
are purchased routinely and in fairly large quantities.

Ex. lubricating oil, pencils, and stationery

classification for organizational products

accessory equipment
used to facilitate rather than to perform the basic operation of an
industrial firm. they do not become an actual part of the finished
product.

Ex. forklift trucks, photocopier, and typewriter

classification for organizational products

installations
major industrial equipment that determine the nature, scope and
efficiency of an organization. they are long-lived and expensive
equipment performing the basic operations of a firm.

Ex. large generators in a dam, a factory building, jet airplanes for

an airline
classification for organizational products

fabricating materials and parts

an actual part of the finished product. they are already processed to some
extent and will undergo processing.

Ex. pig iron going to steel, flour becoming part of bread and zippers
classification for organizational products

service
the 6th category of industrial goods is the intangible product
called service. services are used to facilitate or support the
operations of a firm.

Ex. employee service, repair services, consultancy and office

services
NEW PRODUCT
3 recognizable categories of new products are as
follows:

products that are really replacement for existing imitative

innovative
truly unique. products that are
quite different from existing
products but satisfy the same
needs.
products products
significantly different from new to a particular company
existing goods. but not new to the market.
PRODUCT TECHNOLOGY
3 classes of product technology are as
follows:
high-tech product
tend to be more ‘state of the art’ products
reflecting current levels of technological
advancement such as semiconductors,
laser instruments, satellite systems
mid-tech
product
contains a majority of the
products that we are familiar with
like cosmetics, power supplies,
fertilizers and nutrients.
low-tech product
generally understood to be developed as a
result of small changes or improvements in
existing products such as office furniture,
plastic toys, paper supplies, clothing and
textiles, candy and cookie
PRODUCT TECHNOLOGY
3 classes of product technology are as
follows:

laser instruments

semi conductors

high-tech product
digital cd players
satellite system
PRODUCT TECHNOLOGY
3 classes of product technology are as
follows:
fax machine

fertilizers & nutrients

cosmetics

mid-tech product

desktop publishing
PRODUCT TECHNOLOGY
3 classes of product technology are as
follows:

candy & cookies

building supplies

low-tech product
plastic toys
paper supplies
office furniture
PRODUCT PLANNING AND DEVELOPMENT PROCESS
5 major stages of product planning and
development process:

idea stage concept stage product test marketing commercialization

development stage stage
PRODUCT PLANNING AND DEVELOPMENT PROCESS
5 major stages of product planning and
development process:
idea stage

new product development starts with idea generation-

systematic search for new product ideas. the ideas
could emerge from idea sources or creative problem
solving.
PRODUCT PLANNING AND DEVELOPMENT PROCESS
5 major stages of product planning and
development process:
concept stage
new product idea should be further developed and refined
through interaction with consumers. in the concept stage, the
refined product idea is tested to determine consumer acceptance
without necessarily incurring the cost of manufacturing the
physical product.
PRODUCT PLANNING AND DEVELOPMENT PROCESS
5 major stages of product planning and
development process:
product development stage

in this stage, consumer reaction to the physical product

is determined. one tool frequently used in this stage is
the consumer panel, in which a group of potential
consumers are given product samples.
PRODUCT PLANNING AND DEVELOPMENT PROCESS
5 major stages of product planning and
development process:
test marketing stage

a market test can be done to increase the certainty of

successful commercialization. test marketing stage
provides actual sales results, which indicate the
acceptance level of consumers .
PRODUCT PLANNING AND DEVELOPMENT PROCESS
5 major stages of product planning and
development process:
commercialization stage

at this stage the product will be offered for the market

and hereafter the product may pass through additional
four stages: INTRODUCTION, GROWTH,
MATURITY and DECLINE.
PRODUCT PLANNING AND DEVELOPMENT PROCESS
4 stages of commercialization stage:

introduction stage
this stage starts when the new product is first launched. it takes time and
sales growth is apt to be slow. in this stage:
*profits are negative or low.
*require much money to attract distributors and build their inventories.
*promotion spending is relatively high to inform customers of the new
products and get them to try it.
PRODUCT PLANNING AND DEVELOPMENT PROCESS
4 stages of commercialization stage:

growth stage
if the new product satisfies the market, it will enter a growth stage, in which sales will start
climbing quickly. in this stage:
*the early adopters will continue to buy and later buyers will start following their lead, especially,
of they hear favorable word of mouth.
*new competitors will enter the market, because of the attractions by opportunities for profit.
*firms will introduce new product features, and the market will expand.
*price remains where they are or fall only slightly.
*companies keep their promotion spending at the same or a slightly higher level.
*profits increase during the growth stage, as promotion costs are spread over a large volume and
as unit manufacturing costs fall.
PRODUCT PLANNING AND DEVELOPMENT PROCESS
4 stages of commercialization stage:

maturity stage

at some point, a product sale’s growth will slow down and the
product will enter this stage. this stage normally lasts longer than
the previous stages and it poses strong challenges to marketing
management. some of the weak competitors start dropping out,
and the industry eventually contains only well-established
competitors.
PRODUCT PLANNING AND DEVELOPMENT PROCESS
4 stages of commercialization stage:

decline stage
here, the sales of most product forms or brands eventually dip. sales decline for many reasons, including
due to technological advances, shifts in consumer tastes or increased competition. as sales and profits
decline, some firms withdraw from the market. in this case, carrying a weak product can be very costly
to a firm in following ways:
*a product’s failing reputation can cause customer’s concerns about the company and its other products.
*companies need to pay more attention to their aging products.
*the firm’s first task is to identify those products in the decline stage by regularly reviewing sales,
market shares, costs, and profit trends.
*then management must decide whether to maintain, harvest or drop each of these declining products..
PRODUCT PLANNING AND DEVELOPMENT PROCESS
the ff. are good methods by DONALD CLIFFORD to
recognize the phases of the product cycle, which is as
follows:
• collect information about the product’s behavior over at least a period of 3-5 yrs (information should
include price, units sold, profit-margins, return of investment, market share and value).
• analysis of competitor short-term strategies (analysis of new products emerge into the market and competitor
announced plans about production increase, plant upgrade and product promotion).
• analysis of number of competitors in respect of market share.
• collection of information of the life cycle of similar products that will help to estimate the life cycle of a new
product.
• estimation of sales volumes for 3-5 yrs from product launch.
• estimation of the total costs compared to the total sales for 3-5 yrs after product launch (development,
production and promotion costs).
STRATEGIES AT DIFFERENT PHASES OF PRODUCT LIFE CYCLE

strategies that must be

applied quickly as soon
as the phase of product
life cycle is recognized
are given in the table
below.
STRATEGIES AT DIFFERENT PHASES OF PRODUCT LIFE CYCLE

strategies that must be

applied quickly as soon
as the phase of product
life cycle is recognized
are given in the table
below.
classifying the products
The “chasm” shown in the graph above
the chasm depicts the difference between the early
relative % of customers
and late adopters. Each needs different
marketing strategies and each is
translated to a product’s different phase
of its life cycle.

innovators, technology
early majority laggards,
enthusiasts late majority
early pragmatists skeptics
adopters, conservatives
visionaries
time

customers want technology and customers want solutions and

performance convenience
PRODUCT PROTECTION

-one of the challenges the novice entrepreneur will face as he/she goes
into business understands the regulatory environment which is made up
of numerous laws and regulations.

-to operate as a legal businessperson and protect the business from

unnecessary suits and liabilities, the entrepreneur needs to understand
the various laws that govern his/her business.
intellectual property

-refers to creations of the mind: inventions, literary and artistic works;

and symbols, names and images used in commerce.

-a legal definition of ideas, inventions, artistic works and other

commercially viable products created out of one’s own mental
processes.
intellectual property
2 categories of INTELLECTUAL PROPERTY:
industrial property
-patents for inventions,
trademarks, industrial designs
and geographical indications.
copyright
-covers literary works such as
(novels, poems and plays),
films, music, artistic works (e.g.
drawings, paintings,
photographs and sculptures) and
architectural design.
intellectual property rights

-the importance of intellectual property rights was first recognized in the Paris
Convention for the protection of Property of Industrial Property (1883) and the
Berne Convention for the Protection of Literary and Artistic Works (1886). Both
treaties are administered by the World Intellectual Property Organization
(WIPO).

-IP rights are like any other property right. they allow creators or owners of
patents, trademarks or copyrighted works to benefit from their own work or
investment in a creation. these rights are outlined in the Article 27 of the
Universal Declaration of Human Rights.
patents
-an exclusive right granted for an invention - a product or process that provides a new way of doing
something, or that offers a new technical solution to a problem.

-provides patent owners with protection for their inventions. protection is granted for a limited period,
generally 20 years.

-all patents provide exclusive rights of ownership to patent holders, their heirs and assigns.

-exclusive property rights that can be sold, transferred, willed, licensed, or use as collateral.

-provide incentives to individuals by recognizing their creativity and offering the possibility of material
reward for their marketable inventions.
types of patents
plant patents
utility patents
in botanical terms, any new variety of plant that
granted for new products, process, machines, has been asexually reproduced can be granted a
methods of manufacturing, and compositions of plant patent. the new plant must not exist in
matter. this category excludes most botanical nature or in an uncultivated state. therefore, new
creations related to plant and agricultural use plants, mutants, hybrids, the seedlings may be
process described later in the unit focuses on patented.
utility patents.

design patents
granted for any new or original ornamental design for an
article of manufacture. a design patent protects an
appearance of the article, not the article itself. an inventory
could easily register both a utility patent and a design
patent, but the design patent has a limited life. for example
design patents can be obtained for 14 yrs.
copyright
-is distinct from patents and trademarks in that intellectual property is protected for the life of the
originator. copyright and related rights protection is an essential component in fostering human
creativity and innovation.

-copyright laws grants authors, artists and other creator’s protection for their literary and artistic
creations, generally referred to as “works”.

-works covered by copyright include, but are not limited to: novels, poems, plays, reference works,
newspapers, advertisements, computer programs, databases, fllms, musical compositions, choreography,
paintings, drawings, photographs, sculpture, architecture, maps and technical drawings.

-creators of works protected by copyright, and their heirs and successors (generally referred to as “right
holders”), have certain basic rights under copyright law.
copyright
the right holder(s) of a work can authorize or prohibit:

⚬ its production in all forms, including print form and sound recording

⚬ its public performance and communication to the public

⚬ its broadcasting; its translation into other languages

⚬ its adaptation, such as from a novel to a screenplay for a film

⚬ similar rights of, among others, fixation (recording) and reproduction are granted under related

rights
trademarks
-a distinctive sign that identifies certain goods or services produced or provided byan individual or a company

-dates back to ancient times when craftsmen reproduced their signatures, or “marks”, on their artistic works or
products of a functional or practical nature

-includes any word, name, symbol, or distinguishing device, or any combination thereof adopted and used by a
manufacturer or merchant to identify his goods and distinguish them from those manufactured or sold by others.

-granted through the US Patent and Trademark office for a period of 20 years.
Ex. coke (name) for Coca-Cola Corporation
(symbol) Apple with a bite in the side - Apple Computer Corporation
Wild Mustang horse - Ford Automobile
The intricate shield and eagle design - beer cans by Anheuser - Busch
trademarks
trademark protection
-ensures that the owners of marks have the exclusive right to ...... them to identify goods or services, or to
authorize others to use them in return for payment Trademark protection is legally enforced by courts that, in
most systems, have the authority to stop Trademark protection is legally enforced by courts that, in most systems
have the authority to stop trademark infringement.

service mark
-similar to and can be registered in the same way with the same protection.

-can be a name, wording used in advertising symbols or artistic figures that create a disctinctive service concept .
thanks for
listening!